Commitement related issue

[Former Member]

Dear Sir,

We have a business scenario as per following :

Our company has financial year October to Sept and  for  each new financial year  , fresh yearly Cost Center budget is approved by the management .

We have a Cost Center defined for our IT Department and say against the Commitment Item "GENERAL EXPENSES" , yearly budget of INR 80,00,000 was assigned .

We have Annual Maintenance Contract (AMC)  with SAP INDIA for our SAP Software and  AMC period is  January to December  for a value of INR 60,00,000  and AMC is paid in Advance to SAP INDIA .

At the time of Purchase Order , a Commitment of INR 60,00,000 is getting booked by SAP System against the IT Department Cost Center .  The problem starts with the booking of pre-paid expenses of AMC pertaining to period Oct to December . During Pre-paid run  , again expense of Rs 15,00,000 (for 3 months, Oct to Dec)  get booked against the Cost Center .  Due to this total budget utilization reaches to 75,00,000 .  But logically , the reference 3 months expenses , were part of previous year Budget (as the reference Purchase Order was made in previous financial year) .  In ideal situation Cost Center budget usage should have been only 60,00,000 .

We request SAP experts , to kindly help us for resolving the above problem pl .

With thanks and Regards

Sonia Agarwal

[atif_farooq]

Hi:

In my view once you have created service related commitment at PO level they will be actualized at the as soon as you post service entry sheet, funds actual consumption will occur, however if you want to book its prepaid expense with its reference it will again create funds consumption, to avoid this it is import to create prepaid expense GL's commitment items as statistical , in FMCIA you can mark it statistical in case it has no transactions. It should solve your issue,

Regards

[Former Member]

Hi!

I am new to this funds management but what it seems that you can carryforward your Budget with the key figure that carry forward your consumed budget.
Please check and do confirm!

Regards

[former_member332492]

Hi Sonia,

The Unconsumed Budget (Residual Budget) at year End i.e. September can be carryforward to next year. Hence forth, while booking prepaid expenses pertaining to upto December month can be consumed from Carried Residual Budget.

E.g:  October 2010 to September 2011            - Consumble Budget Rs.60,00,000

     AMC Contract from Jan, 11 to Sept-11        - consumed Budget   Rs.45,00,000

Residual Budget will be Rs.15,00,000

At Year End of sept 2011 you can carryforward the residual budget of Rs.15,00,000 and when booking prepaid expenses for Sept to Dec, 2011 against PO, Budget will be consumed from Residual Budget Carryforwarded, Not from Fresh Budget uploaded.

Hence, the Total budget not reached Rs.75,00,000.

Please contact, if any clarification required.

Regards

Sam